Is the Venture Capital Process Right for Your Startup?

Understand how to prepare and negotiate venture capital investments in your clients’ startups.

In 2016, capital raised by venture funds hit a 10-year high, and venture capitalists invested nearly $70 billion across almost 8,000 companies. Robust VC activity presents an attractive opportunity for startups seeking capital and strategic advice. However, this opportunity can be lost without adequate preparation. Emerging companies rely on counsel to help determine if VC financing is appropriate and, if so, to guide them through the process. Attracting and successfully negotiating VC investments does not begin with a pitch deck and term sheet. Instead, it begins shortly after incorporation. Startups and their counsel must have a plan at the outset.
This material helps emerging companies and counsel identify if and when to seek VC financing and what VC investors look for and how to engage them. It addresses how and why startups should prepare for investors from day 1 and how to identify and avoid common due diligence issues that can delay or destroy deals. Finally, this content highlights standard terms and negotiation points in VC term sheets and deal documents.
Venture firms managed approximately $333 billion in U.S. venture capital assets in 2016. Whether, and how to harness this opportunity, is an important decision in an emerging company’s development. When VC investment is appropriate, attorneys must have the skillset to effectively represent startups from incorporation through investment. With early preparation and a strong understanding of the issues, informed counsel can help clients navigate the VC process, avoid common pitfalls, and add significant value to clients’ businesses.

Faculty

Eleanor Vaida Gerhards

Fox Rothschild LLP

Alexander S. Radus

Fox Rothschild LLP